Chief Justice Benjamin stays Legall injunction against GOB

“We’ve won every step of the way except today and this is just a side matter. The substantive matter is before the Court of Appeal, so I don’t want people to be disheartened.”—Oceana Vice President Audrey Matura Shepherd

Back in April 2013, Oceana, along with interested parties – the Belize Coalition to Save Our Natural Heritage and Citizens Organized for Liberty through Action (COLA) – scored a major victory when Supreme Court Justice Oswell Legall declared six offshore contracts to be “illegal, null and void” because of what the judge found to be violations of the Environmental Protection Act and the Petroleum Act.

The judge went further to issue an injunction, barring the Minister responsible for Energy, Joy Grant, from acting on any of the six production sharing agreements that were challenged before the court. Following a ruling by Chief Justice Kenneth Benjamin today; however, Oceana is essentially back to square one, in a sense.

Oceana had challenged the legality of production sharing agreements (PSAs) issued to Island Oil in 2004, and to Miles Tropical Energy Limited, Petro Belize Company Limited, Princess Petroleum Limited, Providence Energy Belize Limited and Sol Oil Belize Limited in 2007. However, only two of the concessions – those granted to Princess and Providence – were extant at the time of the Legall ruling. Furthermore, Treaty Energy Limited, the joint venture partner of Princess, whose contract includes both offshore and onshore acreages, has been exploring for petroleum onshore in Southern Belize.

Shortly after the Legall ruling, the Government of Belize moved to challenge the decision by Legall: both by filing an appeal with the Court of Appeal, and filing a motion with the Supreme Court, asking for a stay on an injunction by Legall – an injunction which Government attorney, Denys Barrow, SC, has indicated was never requested by the claimant, Oceana, and which, he said, did not put any fetters on the companies; but which, he said, is in fact damaging to the national interest, since it barred the Ministry of Energy from having proper oversight of petroleum exploration activities by Treaty Energy Corporation, joint venture partner of Princess Petroleum.

In his decision, Legall awarded an injunction which he described as “restraining the defendant, servants and agents from carrying out the provisions of the Production Sharing Agreements…”

Barrow told the media on Friday, in explaining the Chief Justice’s decision to stay the injunction, that “If you leave [the Government’s] hands bound – if you prevent them by this injunction from regulating, supervising, governing what the oil companies do, then you are exposing the country to the harm that can result if the oil companies are not being supervised and restricted and limited in what they are doing.”

In order to get the stay on the injunction, the Government had to demonstrate to the court that it has a reasonable prospect of success in its appeal before the Court of Appeal, and it also had to demonstrate that there could be irreparable harm if the injunction remains in effect.

Oceana and the interested parties – the Coalition and COLA – argued that to the contrary, continued petroleum exploration works under the PSAs are likely to cause serious and irremediable harm to the environment, and in particular works under the Providence contract, which includes Payne’s Creek National Park.

In making his decision, CJ Benjamin said, he had to weigh both arguments, and he consequently decided to grant the stay, putting a pause on the Legall injunction granted on April 13, 2013, until the determination of the substantive appeal or until further notice by the Court of Appeal. He also awarded costs to the Government.

What changes going forward? “It means that the ministry, the department can now properly, freely and openly and in accordance with the PSA, as well as in accordance with the general law, regulate what is taking place, so they can ensure that what takes place is properly taking place and they can ensure what the government wants, what the nation of Belize wants will take place without any interruption without any uncertainty without any doubt about what can be done,” said Barrow.

As for the implications for companies, he said that it would restore confidence in the sector.

He said that after the Legall ruling, “…there was in the oil industry, international, a major eruption, a major concern: Oil exploration is shut down in Belize. You would have been aware of the letter from one of the oil companies which said that a 60-million-dollar fund that they were going to have raised by their bankers was shut down because of the impact of that judgment so that judgment creates the impression that you cannot do business as an oil explorer in Belize.”

Attorney for Oceana, Godfrey Smith, SC, told journalists following Friday’s decision by CJ Benjamin that “…obviously there is a great degree of disappointment, but the claimants continue to be unconvinced if the injunction isn’t stayed, government will suffer irreparable harm.”

“We did not believe that an exceptional case was made out; the Chief Justice obviously did. We will take time to look at his reasoning closely, and decide our next step from there,” Smith said.

“I am disappointed, but that is the risk of litigation,” Smith also commented.

Oceana has already indicated that it will appeal the Legall decision at the level of the Court of Appeal. A date for the hearing of the appeal has not yet been announced.

“If this is the ruling of the court, we will respect that decision,” said Oceana in Belize’s Vice President, Audrey Matura-Shepherd, “but we know there is still a legal recourse…we have yet to go to the Caribbean Court of Justice.”

She added that: “It’s not a done deal. You all have seen us starting this case over two years now and we’ve battled it out every step of the way. We’ve won every step of the way except today and this is just a side matter. The substantive matter is before the Court of Appeal, so I don’t want people to be disheartened. I’m surely not disheartened.”

As for the implications of the Chief Justice ruling Friday, Smith noted that, “The oil companies, who are already operating by their own admission, can continue to operate. Our position has always been that that presents a serious risk of harm to the environment, especially in light of Justice Legall’s decision that he found on the evidence that there was risk of harm to the environment in the absence of compliance with the Environmental [Protection] Act and the Petroleum Act.”

Matura-Shepherd said that now that the injunction has been stayed, the Government, she believes, will press ahead more aggressively with plans for offshore drilling.

“Although Providence [which has an offshore contract] and the rest of oil companies are operating on contracts that have been declared ‘unlawful, null and void,’ because the Government feels that they have this push with today’s decision, the level of arrogance they have already been displaying will multiply from 100 to 1000, and that is what people need to look at, you know,” she commented.

She remains optimistic, despite today’s loss in court, that they will win on appeal: “If you want to reach to the mountain top, you’ve gotta go through the shrubs and everything that’s along the way. We will reach the mountain top and we will be successful and we will be proven right,” she said.

Barrow insists, though, that it is the Government that is in the right – and today’s decision by the Chief Justice will remove any doubt of that. He said that Government had been accused of disobeying Legall’s ruling, and so the Chief Justice’s decision will “remove that from off the table” and “remove that from the public consciousness…”

Barrow also contends that the declarations which Legall had made back in April were “with respect, wrongfully made.”

Those declarations Legall granted are as follows:

“A declaration is granted that the Production Sharing Agreements dated 25th May 2004, and the other five Production Sharing Agreements dated 12th October 2007, made by the Government of Belize acting through the defendant, on the one part, and the individual companies… are unlawful null and void because (1) no environmental impact assessment was carried out before making the agreements; and (2) the agreements were entered into with the companies who did not demonstrate a proven ability to contribute the necessary funds, assets, machinery, equipment, tools and technical expertise necessary for the effective performance of the terms and conditions of the agreements.

“A declaration is granted that before entering into agreements or contracts which authorize oil exploration and seismic surveys, an environmental impact assessment is required under the provisions of the Environmental Protection Act, Chapter 328 and the Environmental Impact Assessment Regulations 1995 as amended.”

“We think the declarations ought not to have been made in the circumstances. You do not make a declaration which will confuse people by pronouncing, for instance, a contract [to be] null and void and lead people who do not have the proper exposure to the law into thinking that that means it is quashed,” said Barrow.

In his decision Friday, the Chief Justice also noted that Justice Legall did not quash the petroleum contracts, despite a request made by Oceana. He said that these matters are, indeed, worthy of review by “a higher tribunal” – referring, in the first instance, to the Court of Appeal.